12. Suppose you short-sell 100 shares of IBM, now selling at $175 per share.
a. What is your maximum possible loss?
b. What happens to the maximum loss if you simultaneously place a stop-buy order at $178?
13. Call one full-service broker and one discount broker and find out the transaction costs of implementing the following strategies:
a. Buying 100 shares of IBM now and selling them six months form now.
b. Investing an equivalent amount in six-month at-the-money call options on IBM stock now and selling them six months from now.
11. An open-end fund has a net asset value of $12.70 per share. It is sold with a front-end load of 8%. What is the offering price?
12. If the offering price of an open-end fund is $14.20 per share and the fund is sold with a front-end load of 7%, what is its net asset value?
13. The composition of the Fingroup Fund portfolio is as follows:
Stock Shares Price
A 210,000 $30
B 310,000 35
C 410,000 10
D 610,000 15
The fund has not borrowed any funds, but its accrued management fee with the portfolio manager currently total $20,000. There are 3 million shares outstanding. What is the net asset value of the fund?
This question was answered on: May 23, 2022
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